Prices likely to soar once derelict state houses go, experts say

Alan Kemp is trying to sell his house on Pickett Ave in Sandringham but he believes derelict state houses in the area are putting buyers off. Photo / Natalie Slade

The removal of 19 state homes on a street in the "up and coming" Auckland suburb of Sandringham may see property prices soar, experts say.

Six of the homes are untenanted and have boarded windows, broken fences and graffiti-covered walls.

Housing New Zealand told the Herald yesterday it hopes to re-home the tenants by January and the houses will likely be knocked down before the land is sold.

Anne Duncan real estate agent Jamie Morrison says he has been struggling to sell a home at the lower end of Haverstock Rd as it sits so close to the corporation's stock.

A three-bedroom rear property on a 412sq m section at the other end of Haverstock Rd sold for $1 million this year.

And the company had recently sold a two-bedroom "do-up" on 695sq m one street over on Hazelmere Rd for $710,000 and a four-bedroom home on 696sq m on nearby Fowlds Ave for $1.16 million.

But he was struggling to reach offers of higher than $600,000 for a three-bedroom home on a 771sq m section on Pickett Ave, a cul-de-sac off the lower end of the road.

"I've got a fully renovated, rewired, re-plumbed property on a full site and we haven't even got interest above the sixes.

"That's a clear indication of people's preference for one end of the street.

"The interesting thing about this property is I can't get people to it, because they go down there, take one look at the state housing and leave.

"Those properties have been left derelict as tenants moved out. Instead of maintaining them, they've boarded them up and it looks like a ghetto, it's an absolute disgrace.

"I've been jumping on Housing New Zealand's back for the last three years because it's disappointing that they've treated the local residents in this way."

Neighbours yesterday said they were pleased something was being done to clean up the area with one adding the street was "starting to look like South Auckland".

Real Estate Institute chief executive Helen O'Sullivan said house prices could rise if new developments reflected other homes on the street.

"If the next-door properties are in poor repair, that's always going to have an impact on the values of the surrounding houses. If you go to buy a house and the place next door is a bomb site, you wonder about the neighbours regardless of whether the neighbours are Housing New Zealand or a private owner.

"If there's something built there that is sympathetic to the surrounding area and of reasonable quality, which you would expect in that part of town, then I think it will have a really positive effect."

The median house price for Sandringham as at September 2012 was $675,250.

Housing New Zealand said it would be too costly to redevelop within the area.

"The current property values within this high-value residential area are around $700,000-$800,000 for a standalone four-bedroom house," said acting general manager asset development, Nicolas Giraldo.

"Income-related rents on these properties, if redeveloped, would be inadequate to justify redeveloping the state properties."

Tenants from the 13 occupied homes would be relocated to state housing in an area of their choice, if available, between now and January.

He says he has struggled to attract potential buyers who are put off by the neighbouring homes, despite nearby houses selling for more than $1 million. But he hopes Housing NZ's decision to get rid of the homes will raise interest.

"I bought it on the basis they were going to do something about it," he said. "I fell in love with it when I saw it - the big windows, the parquet flooring. The last owner hadn't opened a window in 20 years, the dirt on them was two inches thick. It was utterly foul."

The 64-year-old bought the home with wife Judy in May for $575,000 when the council valuation was $580,000 and he has spent thousands restoring it. The three-bedroom house, which sits on 771sq m, has seen its aged kitchen and bathrooms stripped, broken ceilings replaced and a new plumbing system put in.

Outside, Mr Kemp removed 19 trees to admit light, took out the driveway to create a large front yard and put wooden fencing in.

He also changed his address from Haverstock Rd to Pickett Ave, a quiet cul de sac, as the property sits on the corner of the two streets.

Mr Kemp believes anything above $700,000 would be a fair price. The home is to go to auction next week.